If the ‘bat’ symbolizes
good luck and success for Bacardi, ERP will probably help the bat take
off to new heights. The company, which is well-known worldwide for alcoholic
beverages, set foot in India only two years ago. However, with speedy
adoption of information technology it is now operating from about a
dozen offices spread across the country. The cornerstone of the company’s
IT strategy has been going in for ERP at a relatively early stage. "We
followed a simple structured methodology with tight project management.
The key point that was kept in mind was to enable fast implementation
in tune with our business," says Alok Biswas, IT Head, Bacardi-Martini
The IT model
An ERP package may not provide a readymade solution to all the operational
woes of a company. In order to ensure that the software is truly effective,
a crucial factor that needs to be assessed is its adaptability to the
business environment. Before installation, every organization usually
reviews its existing business model to identify the areas which have
to undergo change. This also helps determine the extent of customization
required in the ERP solution. Fortunately for Bacardi, the company had
a peculiar advantage when it set up shop in India. It could easily build
a business process around the ERP software as it did not have any established
structure to tackle. This minimized the need for customization. "Being
a new company, we didn’t have any existing business process. This helped
us avoid the adjustment problems which others encounter while installation
[of an ERP]," says Biswas.
In the first phase, an IT infrastructure was set up at two sites: the
factory in Mysore and the head office in Delhi, with eight seats per
location. An initial investment of about Rs50 lakh was made for hardware
and software installation.
The company selected QAD’s Mfg/Pro ERP software, on Sun’s Solaris operating
system. There is a local area network setup using Windows NT file server
with Win95 clients and email, which is being provided by SITA, a managed
data network services provider.
While implementing an ERP solution, most users are usually not able
to utilize all the applications provided by the vendor. To avoid such
confusion, Bacardi adopted a cautious approach. A conscious decision
was taken to concentrate mainly on the modules meant for commercial
transactions and manufacturing. At present, the software is being applied
in areas such as purchase, inventory, accounts payable, sales order
processing, shipments and sales accounting, accounts receivables, general
ledger consolidation and reporting.
Selection and implementation
Deploying a highly business-oriented package like ERP needs proper planning
and implementation based on the requirements of an organization. Having
little IT expertise itself, Bacardi wanted to hire a consultant with
vast experience in the management and application of the concept. Andersen
Consulting was selected as the implementation partner on the basis of
its market reputation. The firm helped identify a business model around
the software and prepared a comprehensive IT strategy for Bacardi. It
suggested QAD’s Mfg/Pro software because of the package’s proven strength
in manufacturing. "Since we have a production base in the country,
we needed a software that could be utilized for future planning in our
manufacturing unit," explains Biswas.
Eastern Software was appointed for customization, which was done only
in a few areas like document layout and rearrangement. Before actual
installation, Linc Software, a partner of QAD, had done a trial run
in its own lab environment. QAD’s role was limited to software delivery
and installation support. After the system requirements for ERP were
fulfilled, the installation at each site took less than two days. The
training on the application was provided by Andersen. "They also
identified the areas of customization based on our business needs,"
The company considered ERP packages only from the MNCs, as it felt these
were more suited to its future expansion plans than packages available
from Indian vendors. "After Bacardi successfully establishes itself
in India, it wants to set up manufacturing sites in other Southeast
Asian countries as well," says Biswas. Moreover, the products developed
in India are effective only in bits and pieces and need experience and
comprehension, according to some industry experts.
Getting the benefits
In order to make the ERP package truly beneficial for the company and
its employees, it is also important for the management to involve end
users in the decision making process. Their needs and problems have
to be identified. Which was what Bacardi-Martini did, says Biswas.
Another way to maximize benefits is to minimize customization, feels
Biswas. "Although customization is essential for interface with
outsiders, it is better to adjust to the software as far as possible,"
he says. "We had complete faith in the package we selected. In
fact, we didn’t even feel the need for a parallel run."
In the second phase of ERP implementation Bacardi wants to extend the
benefits by integrating all the 10-12 offices all over the country.
This will enable collaborative working and discussion. "Although
supporting an ERP package at remote places is quite difficult, we want
all our employees to utilize the information base that has been created,"
says Biswas. An extranet will also be set up to build remote access
to the ERP system. The company aims at deploying a supply-chain management
system, which will further help multiply the benefits of the company’s
present IT network. The bat will then flap its wings more vigorously.
benefits from ERP
Although the ERP program became operational only in April ’98, the
* An integrated information base has been created for most of the
* Review and monthly closure of finances, maintenance of accounts
* Ad hoc queries and deliveries in areas like stock, sales, liabilities,
* Manpower recruitment has been restricted to some extent. There
* Availability and accessibility of online information helps avoid
* The company can now meet its targets and timeframes more effectively.
in New Delhi.